If there are two buzzwords in football right now they’re probably “profitability” and “sustainability”. The change from Financial Fair Play (FFP) to the Profitability and Sustainability Rules (PSR) isn’t really much of a change bar the acronym but given recent incidents involving high-profile clubs such as Man City, Everton and Nottingham Forest, it seems to be finally bearing its teeth.
PSR in itself is simple - it’s a measure of every penny coming into the club and every penny going the opposite way, encompassing everything from sponsorship deals, transfer fees and match day revenue. In the end, this gets neatly presented in a ratio (%) and shared when clubs announce their accounts. Overall clubs in the top tier are allowed to lose a touch over £100m over three years before they fall foul of these rules.
Whilst adhering to PSR is the preserve of the Premier League it has had a trickle-down effect on football outside England's top tier. Clubs and their fans have become increasingly aware of their respective sides' turnover to wages ratio and what it means for the sustainability of their much-loved club.
Clubs that have fallen foul of this lack of sustainability outside of the top tier have found themselves facing relegation, points deductions, transfer embargoes, and in the most serious circumstances even going out of business entirely.
Of course, all of this is a very simplistic look on things and people far more knowledgeable and experienced than myself will ably explain the nuances within this system, if they have not already. So at the behest of not wasting any more time talking about things only accountants would get horny for, I’d rather look at the tangible effects it has on clubs and what that means for the fans.
Much like a pro-Brexit rally, Hull represents a logical starting point and a pertinent one too given some of our own fans glossy eyed adoration for Hull City’s spending during the January transfer window.
As part of this somewhat lavish package is the news that in the 2022/23 season Hull’s wages-to-turnover ratio stood at a whopping 131%. For Hull fans this has been labelled as their “model”, a full-throated spending spree in which they launch their assault upon the Premier League, an enticing prospect if not one that is followed by the question of its long-term sustainability.
In Hull’s terms that means sometime shortly, should they fail to achieve promotion, they’ll have to find £25m+ to balance the books and cut their cloth accordingly to hit the sweet spot of around 70% wages to turnover, the most likely source being player sales.
In Sunderland terms the comparable solution would be to imagine selling Jack Clarke and then not spending a solitary penny of that cash. The fume would be unimaginable, but that would be the reality of losing £400,000 a week like Hull already do.
Hull aren’t the only ones rolling the financial dice too, with Ipswich Town also happy to get in on the act. In League One last season Ipswich tipped the scales with their wages at a lofty 114% of turnover and adding the likes of bonuses, promotion wage rises and Kieffer Moore to the tune of £30,000 a week, that total will only rise. With all due respect to the big man, I don't think he’ll be paying his wages back in shirt sales.
For Sunderland to match this, £30,000 per week would represent doubling our reported wage cap in order to fulfill the obligation of paying 75% of Moore's wages. Of course, people will argue these fees are risk and reward given the lure of promotion, but the effects of spending over £1m for potentially no return also represents too much of a gamble for a club that arguably gets the best value for money from all of its players.
What is more sobering is the notion that those clubs mentioned aren’t even the tip of the iceberg, with Hull’s figure of 131% being dwarfed by Reading who were duly relegated with a wages to turnover ratio of 165% - they now sit in the bottom four of League One.
This isn’t a new problem either, with Derby County boasting a 161% ratio in 2018 and Wigan Athletic hitting 169% in 2018/19, with both clubs subsequently finding themselves with point deductions and relegation to the third tier. It seems that regardless of who you are, whether it be former Premier League clubs or former FA Cup winners, that the finances catch up with you, and when they do can have drastic consequences.
These tales are of course cautionary when it comes to Sunderland, with the recent ownership working their magic to reduce our wages-to-turnover ratio to a mere 36% upon their last accounts - a figure that most clubs could only dream of.
What this means too cannot be understated. with a host of high value assets, Sunderland’s modest wage bill will provide the club with a platform to reinvest incomings heavily - should they wish - into the next development of the squad when players are sold, rather than utilising these sales to keep the club financially stable.
This, of course, isn't always the most popular approach, with many fans unconcerned about the finances involved to make such moves happen and to realise such lofty ambitions, but it also stands to be an approach that hinges more on gamblers luck than any kind of guile. As we’ve seen before, when the luck runs out the results can be catastrophic for a club.
Instead, Sunderland seem determined to stick to a more stable footing for now, to carefully consider investment and to balance the books, so that when the day comes - and believe me, it will come - Sunderland can not only reach their potential but maintain it.
It isn’t until you look at the bigger picture that you see ambition has a cost - a cost that gambles millions of pounds and the entire club's future, all to chase the same dream.
Of course, we all want our club to be ambitious but we also want our club to stand the test of time, to never have to endure the League One years and the petulant Premier League primadonnas ever again. Ambition isn’t a singular ladder that you buy your way up. Things can be done differently and if you ask me, doing things the right way - the responsible way - stands to give us a far greater reward.